Starting in May 2020 cannabis equity loan borrowers who have become delinquent on loans they received from the City of Oakland will have an opportunity to avoid the penalties outlined in their loan agreement if they enter into an Equity Loan Modification Agreement and remain in compliance with the “Gaining Resources to Achieve Sustainable Success (“GRASS”)” program. The goal of the Equity Loan Modification Program is both to acknowledge the financial challenges involved in starting a cannabis business in the regulated marketplace and to ensure that ongoing loan funding is available to Equity Loan applicants through loan repayments. Equity Loan Modification Agreements still require Equity Loan borrowers to repay their loans, however, the Equity Loan Modification Program allows for a good faith deposit, extension of the total equity loan term by 12 months and reduced initial repayments as equity entrepreneurs get their businesses back on track. Note that entering into a Loan Modification Agreement does not cause the City of Oakland to waive any of its rights under the Commercial Loan Agreement. Click here to download Loan Modification Program Overview.
If you are interested in applying for a loan modification, please complete the Loan Modification Request form found at the bottom of this page.
Specifically, the Equity Loan Modification Program payments consist of the following:
- Good Faith Deposit: Upon entering the program, Participants will be required to make an Equity Loan Modification Deposit equal to a minimum of 1% of the Outstanding Equity Loan Balance. The Outstanding Equity Loan Balance takes into account all payments made to date by the Borrower. Borrower can choose to pay more than 1%
- Extension of the Equity Loan Term: The total Equity Loan term will be extended by an addition twelve months from 48 months (4 years) to 60 months (5 years) from the 1st Equity Loan payment date.
- Reduced Equity Loan Payments Months 1 – 12: 10% of the Outstanding Equity Loan Balance (after deduction of the Equity Loan Modification Deposit), will be payable in monthly installments for months 1 – 12.
- Modified Equity Loan Payments Months 13 – 24: 20% of the Outstanding Equity Loan Balance (after deduction of the Equity Loan Modification Deposit and the Modified Equity Loan Payments Months 1 – 12) will be payable in monthly installments for months 13 – 24.
- Modified Equity Loan Payments Months 25 – 60: The Outstanding Equity Loan Balance, (after deduction of the Equity Loan Modification Deposit, and Modified Equity Loan Payments for months 1 -24) will be payable in monthly installments for months 24 to 60 months from the 1st Equity Loan payment date.
Equity Loan Modification Numeric Example:
Sample Equity Loan Modification Amortization Schedule: